Best prop firms in NYC for traders with quality track records?

birdstone · Aug 30, 2009

Quote from xdiesel123x:

you lose 5k and your 5 k is gone-you have to put more in-at least thats the way in the beginning.

xd

Thanks xd.

I've spoken with a few people this weekend, and they told me that some of the mentioned prop firms will split losses with me 50/50, for a larger % share of the profits and if they are confident in me based on a quality track record with aversion to losses.

Thansk to everyone who helped me with information. I want to be somewhat prepared before I make any phone calls. I don't want to ask stupid questions and waste anyones time. i think i'm now educated enough to make introductory calls.

WinItAll · Aug 30, 2009

Bird,

Whoever you spoke to is wrong, firms either back their traders or they don't. I have never in my trading career heard of a 50% split on losses. Firms either take a training fee or risk capital (both are the same thing) or back their guys.

Any money you hand over to the firm is no longer yours unless you just go to a firm that will take your money and leverage you out. I have dealt with both kind of places and believe it when I tell you that when you put up your own money, no matter what the contract says, you're not going to be able to trade anymore when you go thru it. If a firm takes your money they aren't putting money behind you, you will be asked to reload your account.

This is especially true in your case, since you do no volume. A firm's that pays you 100%, or close to it, makes their money off your shares traded, but if you are trading 5k a day then there's really no reason for a firm prop firm to do business with you unless it's on a profit split. You are the worst type of trader for firms that make money on commissions b/c you trade volatile stocks and don't trade any volume.

If anyone asks you to put up any amount of money then you are better off trading for yourself. If they want to back you then go for it. I have never seen a prop firm take a Partial deposit from an experienced trader, EVER. They either look at your record and back you or they don't. Like I said, if you put up any money at all make sure you're getting a 100% payout because if you go thru that and don't have more put away, you won't be trading for that firm again.

birdstone · Aug 30, 2009

Quote from WinItAll:

Bird,

Whoever you spoke to is wrong, firms either back their traders or they don't. I have never in my trading career heard of a 50% split on losses.

WinItAll--many thanks for taking the time to explain this to me. You know, that's the last time I listen to a few blowhards at a sat. evening party. I didn't know these guys, and now see they were just blowviating while being drunk (not that there's anything wrong with being drunk and blabbing).

Quote from WinItAll:

You are the worst type of trader for firms that make money on commissions b/c you trade volatile stocks and don't trade any volume.

This is 100% the truth. I offer no value to any firm because they will make no money off of me commission wise. I'm not ashamed to say I will not over-trade, i'm too experienced. So the question now becomes...if a firm will back me (and see they will make no commission $ off of me), what split is appropriate? Let me add that I can show a very impressive track record for over 10 years. A track record of all winning years, and very few losing quarters, showing I manage risk extremely effectively while trading the most volatile stocks.

Thanks.

WinItAll · Aug 30, 2009

Bird,

To be honest, it completely depends on how much money you've made. While making money for 10 years is great, at the same time if the amount isn't substantial it might be hard for you to find a taker. Most firms use the commissions as a buffer, that way if you lose say 10k your first month your commissions will cover it. In your case it would just be a straight profit split, so there's no buffer, they simply lose what you lose if you have a bad month for some reason.

As far as your split goes, like I said it depends on how much BP you're looking for, the amount of money they are planning on allowing you to lose should things not start off well, your commissions and what share size you'll be trading. Lastly, probably the most important question would be what stocks are you trading. I'm not sure if you're currently trading on the side or if you are doing it for a living. Unless your trading Berkshire, Google or something similiar all day long I really don't understand how you are making a good amount of money trading around a few thousand shares a day. I'm sure that you're telling the truth about your track record and if you told me how you trade in a little more detail I would be able to tell you what is fair. For me personally, getting in and out of stocks that are in play, I do anyware from 20k - 300k shares getting in and out of a stock depending on what the stock, so I'm just wondering whether the stocks your trading are all trading above 300 bucks or something b/c if they are it's very hard to become a bigger trader and take size in a google or bidu. However, if you are consistant and profitable trading things like AIG the last few days then a firm would be a lot more attracted to you in terms of a profit split b/c they'd be able to size you up and thus make alot more money from you.

Anyway, either PM me or post a reply and I'll let you know what you should be asking for as far as split, commissions and bp.

birdstone · Aug 30, 2009

Quote from WinItAll:

Bird,

To be honest, it completely depends on how much money you've made. While making money for 10 years is great, at the same time if the amount isn't substantial it might be hard for you to find a taker.

As far as your split goes, like I said it depends on how much BP you're looking for, the amount of money they are planning on allowing you to lose should things not start off well, your commissions and what share size you'll be trading. Lastly, probably the most important question would be what stocks are you trading. I'm not sure if you're currently trading on the side or if you are doing it for a living. Unless your trading Berkshire, Google or something similiar all day long I really don't understand how you are making a good amount of money trading around a few thousand shares a day.

Thanks again WinItAll.

I'll try to give details. We can always goto PM if need be. I can trade up to 30K to 50K a day if things are going well (this year, things are so dead i'm down to 3K a day volume on average). No I don't trade goog or berkshire, but I do trade any $50 and up stock that is highly liquid (berkshire isn't) and is volatile. The stocks I trade are all big cap--so my trading style is the perfect one for sizing up. I've made around $5M over a 15 year period. All winning years. I've had positve returns of between 30-50% in my best years, and positive returns of 5%-10% in the lean years (2009, 2005 for example).

If I trade 2,000 shares of a REIT stock, which can move 3-5 points on good days, i can pocket $5K on a good trade. Say I make 50 good trades a year on average.

Again, the most impressive part is my aversion to losses. I've had the market move against me 40%, and i've broken even. I have very few losing quarters, and when i've endured a losing quarter, it's only been 2-3% of my portfolio.

I'm beginning to recognize that Prop firms may not be the way to go. maybe i'm better off partnering up with a hedge fund that wants my unique skill (and I know it is unique). The impetus for my interest is that i've been in semi-retirement, but I'm still young and now i'm yearning to do more with my life.

Hope this helps.

BTW--I would never trade AIG 1) I don't trade reverse splits 2) i've been around for iomega, presstek, diana etc etc. I've seen short squeezes that have killed people, while the fundamentals of the company enduring the short squeeze continue to suck. Like I said, I'm risk efficient enough to know what stocks to not trade as well.

WinstonTJ · Aug 30, 2009

Winitall seems to know exactly what he/she is talking about.

Bird, if you are making that kind of money why do you want to move over to a fund/firm? There are 256 trading days a year, if you make $5k on a good day you must make a decent salary.

What could a prop firm possibly give you that you don't already have? Are you looking for someone to back you with $$$?

birdstone · Aug 30, 2009

Quote from WinstonTJ:

Bird, if you are making that kind of money why do you want to move over to a fund/firm? There are 256 trading days a year, if you make $5k on a good day you must make a decent salary.

What could a prop firm possibly give you that you don't already have? Are you looking for someone to back you with $$$?

Great question! Here's my sincere answer--

Quote from birdstone:

The impetus for my interest is that i've been in semi-retirement, but I'm still young and now i'm yearning to do more with my life.

Yes, i am looking for someone to back me. I'm looking to find some group that appreciates my unique ability in the markets, and will back me and bring me in to their group to knock ideas around. All of my trades can easily add zero's to the size without changing anything with respect to efficiency.

WinItAll · Aug 31, 2009

Bird,

If you are only putting on 3000 shares a day then I think you will have a lot of trouble finding a firm. I'm assuming that you are a day trader and not an investor, if I'm wrong please correct me.

No firm will get behind you trading 3K shares a day. I believe you in what you are saying b/c I don't think you'd be wasting your time in this chat, but I can tell you with 100% certainty that the entire conversation will revolve around why you don't want to just trade your own money. And no matter what reason you give that's where the conversation will stay.

But bottom line is that you're alot better off backing yourself with your trading style b/c firms will probably be hesitant to take you on b/c of your trading style.... Not that it's not profitable or a great way to trade, but it's not an attractive style for the business model that most of these places have. If you are holding overnights then your style makes alot more sense, but in the eyes of someone running a firm that is even riskier for a guy they've never had trade under them before.

Like I asked before, please describe what type of trader you are, aside from risk adverse, and what stocks you look at regularly so I can better help you. But, from what you've told me so far, if you do have 5m put away, then just open an account with a B/D or clearing house and deposit 500k. They will give you a commission less the 2 bucks per thousand, a 100% payout and a minimum of 5 million BP *will go up into the tens of millions after a month or so*

birdstone · Aug 31, 2009

Quote from WinItAll:

Bird,

If you are only putting on 3000 shares a day then I think you will have a lot of trouble finding a firm. I'm assuming that you are a day trader and not an investor, if I'm wrong please correct me.

No firm will get behind you trading 3K shares a day.

Do you mean no Prop firm will be interested in funding me at all?

Given that I want to "partner uip" and get involved with a group, do you believe finding a hedge fund would be a better route?

Thanks.

DHOHHI · Aug 31, 2009

Quote from birdstone:

Do you mean no Prop firm will be interested in funding me at all?

Given that I want to "partner uip" and get involved with a group, do you believe finding a hedge fund would be a better route?

I agree that no prop firm will want to even give you the time of day if a few thousand shares is what you're trading -- no offense intended. There are many ways to trade, be profitable and thrive. You seem to have a way to produce consistent returns. Question -- if you've done well over the past 15 years -- with no losing years, then I would assume you should have plenty of capital to continue trading retail.

And as far as getting in the door at a hedge fund -- again, I don't think you'll find interested parties. You stated you trade big caps, $50 or more. But how is that unique? Plenty of funds are trading similar stocks.

Last, the old saying "if it ain't broke, don't fix it". If a trading methodology has worked for 15 years why change? Why try to scale up? How would you react to more risk ($$$) per trade? Would you be as disciplined in exits?

I started almost 14 years ago full time with $90K. I've had great years and some mediocre years. This is my only source of income. Being your own boss trading retail allows you to do whatever you want each day -- total freedom. And one thing I've found -- my trading, as far as approaches, has, and continues to evolve. Strategies that worked in the past don't work forever. IMO to succeed longer term one has to not be focused on a single approach.